Hedge Funds Are Selling Pfenex Inc (PFNX)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Pfenex Inc (NYSE:PFNX).

Is Pfenex Inc (NYSE:PFNX) going to take off soon? The best stock pickers are getting less bullish. The number of long hedge fund bets were cut by 2 lately. Our calculations also showed that PFNX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most traders, hedge funds are viewed as worthless, old investment tools of yesteryear. While there are more than 8000 funds trading at present, Our experts choose to focus on the aristocrats of this group, approximately 850 funds. These hedge fund managers control bulk of the hedge fund industry’s total capital, and by shadowing their top investments, Insider Monkey has formulated several investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Samuel Isaly - Orbimed Advisors

Samuel Isaly of OrbiMed Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a glance at the new hedge fund action surrounding Pfenex Inc (NYSE:PFNX).

Hedge fund activity in Pfenex Inc (NYSE:PFNX)

At Q1’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards PFNX over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in Pfenex Inc (NYSE:PFNX), which was worth $13.7 million at the end of the third quarter. On the second spot was OrbiMed Advisors which amassed $11.5 million worth of shares. Park West Asset Management, AQR Capital Management, and Royce & Associates were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Integral Health Asset Management allocated the biggest weight to Pfenex Inc (NYSE:PFNX), around 0.33% of its 13F portfolio. Park West Asset Management is also relatively very bullish on the stock, earmarking 0.32 percent of its 13F equity portfolio to PFNX.

Judging by the fact that Pfenex Inc (NYSE:PFNX) has faced declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few hedge funds that slashed their entire stakes by the end of the first quarter. Interestingly, Michael Castor’s Sio Capital dumped the biggest position of all the hedgies tracked by Insider Monkey, totaling an estimated $2.6 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund said goodbye to about $2.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks similar to Pfenex Inc (NYSE:PFNX). These stocks are US Concrete Inc (NASDAQ:USCR), Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), Dynavax Technologies Corporation (NASDAQ:DVAX), and Ituran Location and Control Ltd. (NASDAQ:ITRN). This group of stocks’ market valuations are similar to PFNX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
USCR 12 23829 -1
DHIL 11 24838 -3
DVAX 8 19065 -5
ITRN 10 44551 0
Average 10.25 28071 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $41 million in PFNX’s case. US Concrete Inc (NASDAQ:USCR) is the most popular stock in this table. On the other hand Dynavax Technologies Corporation (NASDAQ:DVAX) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Pfenex Inc (NYSE:PFNX) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. Unfortunately PFNX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PFNX were disappointed as the stock returned -2.8% during the second quarter (through June 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.